Are you interested in investing in a rental property in Vancouver, WA? It's a great place to live and has an above-average median wage. As a result, your real estate investment can rake in a lot of cash.
However, if you're not strategic, you might find that your monthly rental income isn't what you'd like it to be. One of the best ways to succeed with your real estate investment is to assess its value.
This guide will show you how to determine the rental valuation of your property.
Here's what you must know:
What Determines Property Value?
You must first understand what causes a property value to increase. The first factor is your property's curb appeal in reality and online. If your property is attractive inside but ugly outside, you'll have to charge lower rent prices!
Location is another factor to consider. If your property is in a desirable location, its value can increase tremendously. A small apartment in the Downtown area might be more valuable than a small house in a distant area.
If your rental property is part of an HOA, this can also increase its value. HOAs play a crucial role in maintaining your property to certain standards.
Renters often want to be part of a community that keeps all properties inspected at all times. The major benefit of an HOA is that you'll always have others to ensure your property maintains its value.
You can always charge whatever price you wish. However, if you go well above a valued price, you may not find tenants. You'll have to offer more to your tenants if you want to charge higher prices.
Rental Valuation Methods
Now let's look at a few methods for rental valuation that you can consider. The first approach is the sales comparison approach.
With this approach, you'll compare your property to other similar properties in the area. You can charge a monthly rental income based on what other landlords charge.
Another approach is the capital asset pricing model. You'll have to weigh the risks and opportunity costs. If your mortgage is $3,000 per month, can you charge a rental fee to cover this cost, for instance?
This is the riskiest model. You'll have to consider maintenance charges in addition to your mortgage.
The easiest method to consider is the gross rent multiplier approach. You'll determine how much rent you can likely collect each year. This amount is before taxes and other expenses. This is the simplest way to decide whether the property is worth your initial investment.
Start Investing Today
Now you can know how rental valuation works and the approaches to consider when investing in real estate.
Once you've determined which approach you want, you must also consider how you can increase your property's value. Your first step is to improve the curb appeal. If you're part of an HOA, they can assist you with maintaining high standards for your property.
Invest West Management has served many happy clients throughout the Vancouver area. We'll be glad to help you as well.
